Avex : 〔Delayed〕Consolidated Financial Summary for Interim Period of Fiscal Year Ending March 31, 2022

Consolidated Financial Summary for Interim Period of Fiscal Year Ending March 31, 2022

(Japanese Accounting Standards)

November 4, 2021

Avex Inc.

Tokyo Stock Exchange, First Section

Code No: 7860

(URL https://avex.com/jp/en/)

Representative: Katsumi Kuroiwa, President, CEO

Contact: Shinji Hayashi, Representative Director, CFO

TEL: [phone]

Scheduled date to submit the Quarterly Securities Report (Shihanki Houkokusho): November 8, 2021

Scheduled date for commencement of dividend payments: December 2, 2021

Supplementary documents for financial results: Yes

Financial results briefing: Yes (Video streaming will be provided to institutional investors and securities analysts.)

Note: All amounts are rounded down to the nearest million yen.

1. Consolidated operating results for the interim period of fiscal year ending March 31, 2022

(April 1, 2021 to September 30, 2021)

(1) Consolidated operating results

Note: Figures in percentages denote the year-on-year change.

Net sales

Operating income

Ordinary income

Profit (loss) attributable to

owners of parent

million yen

%

million yen

%

million yen

%

million yen

%

Interim Period of Fiscal Year

46,304

35.1

2,634

-

2,623

-

1,612

-

Ending March 31, 2022

Interim Period of Fiscal Year

34,279

(44.0)

(2,229)

-

(2,557)

-

(3,289)

-

Ended March 31, 2021

(Note) Comprehensive income

Interim Period of Fiscal Year Ending March 31, 2022:

¥1,569 million (-%)

Interim Period of Fiscal Year Ended March 31, 2021:

-¥732 million (-%)

Net income per share

Diluted net income per share

yen

yen

Interim Period of Fiscal Year

37.03

37.02

Ending March 31, 2022

Interim Period of Fiscal Year

(75.53)

-

Ended March 31, 2021

(2) Consolidated financial position

Total assets

Net assets

Shareholders' equity ratio

million yen

million yen

%

As of September 30, 2021

94,438

60,920

61.6

As of March 31, 2021

105,105

58,339

52.6

(Reference) Shareholders' equity

As of September 30, 2021:

¥58,143 million

As of March 31, 2021:

¥55,306 million

2. Status of dividend payments

Annual dividends

End of first quarter

End of second quarter

End of third quarter

End of year

Annual

yen

yen

yen

yen

yen

Year ended March 31, 2021

-

25.00

-

96.00

121.00

Year ending March 31, 2022

-

25.00

Year ending March 31, 2022

-

25.00

50.00

(forecast)

(Note) Revisions to dividend forecasts published most recently: None

3. Forecasts for consolidated business results for the fiscal year ending March 31, 2022 (April 1, 2021 to March 31, 2022)

Note: Figures in percentages denote the year-on-year change.

	Operating income	Profit (loss) attributable	Net income per share
	to owners of parent
Year ending	million yen	%	million yen	%	Yen
March 31, 2022	3,000	-	1,800	(86.0)	40.65

(Note) Revisions to earnings forecasts published most recently: Yes

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Avex Inc. (7860) Consolidated Financial Summary for Interim Period of Fiscal Year Ending March 31, 2022

• Notes
• 1. Changes in significant subsidiaries during term under review (changes in specific subsidiaries in conjunction with changes in scope of consolidation): None

New: - company (Company name) -

Excluded: - company (Company name) -

1. Application of particular accounts procedures to the preparation of quarterly consolidated financial statements: None
2. Changes in accounting policies and changes in or restatement of accounting estimates
   1. Changes in accounting policies in conjunction with revisions to accounting standards: Yes

2.	Changes in accounting policies other than 1:	None
3.	Changes in accounting estimates:	None
4.	Restatement:	None

(4) Outstanding shares (ordinary shares)
a. Shares outstanding at end of term (including treasury stock)
As of September 30, 2021:	45,440,100 shares
As of March 31, 2021:	45,343,500 shares
b. Treasury stock at end of term
As of September 30, 2021:	421,948 shares
As of March 31, 2021:	3,927,388 shares
c. Average number of share (quarter-to-date)
Interim Period of Fiscal Year Ending March 31, 2022	43,538,752 shares
Interim Period of Fiscal Year Ended March 31, 2021	43,547,440 shares

• This financial summary is outside the scope of audit procedures by certified public accountants and audit firm.
• Explanation for forecasts of business results and other notes
  The forecasts for operating results and others contained in this release are based on data and information that the Group has obtained so far and specific assumptions that the Group judges to be reasonable. Please note, therefore, that the actual results and others may greatly differ from the forecasts due to various factors.

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Avex Inc. (7860) Consolidated Financial Summary for Interim Period of Fiscal Year Ending March 31, 2022

1. Qualitative Information on Consolidated Results, etc. for the Interim Period of Fiscal Year Ending March 31, 2022

(1) Summary of Operating Results

(Unit: million yen)

	Fiscal year	Fiscal year	Fiscal year	Fiscal year	Fiscal year
Interim period results	ended March	ended March	ended March	ended March	ending March
	31, 2018	31, 2019	31, 2020	31, 2021	31, 2022
Net sales	68,405	83,012	61,189	34,279	46,304
Cost of sales	48,967	60,067	44,658	23,060	28,797
Gross profit	19,438	22,945	16,531	11,218	17,507
Gross profit margin	28.4%	27.6%	27.0%	32.7%	37.8%
Personnel expenses	6,097	6,626	5,647	5,360	5,646
Sales promotion and advertising	3,947	4,802	3,948	2,330	2,989
expenses
General expenses	8,550	7,803	7,624	5,756	6,236
Total SG&A expenses	18,594	19,232	17,220	13,447	14,872
Operating income (loss)	843	3,712	(688)	(2,229)	2,634
Operating margin	1.2%	4.5%	-%	-%	5.7%

In the entertainment industry, to which the Group belongs, the production of music software, including music videos, was down 1.1% year on year, to 136,288 million yen (January to September 2021; according to a survey by the Recording Industry Association of Japan). Sales of paid music downloads were up 15.5% year on year, to 43,609 million yen (January to June 2021; according to a survey by the Recording Industry Association of Japan). In the video-related market, sales of video software fell 1.0% year on year, to 93,458 million yen (January to August 2021; according to a survey by the Japan Video Software Association). The digital video distribution market is expected to continue to grow, given the enhancement of video distribution services and the environmental changes that will improve user convenience, such as responses to TV devices and the dissemination of 5G.

In these business conditions, the Group has been seeking to achieve medium- to long-term growth through working to create strong intellectual properties by discovering and developing artists, talent and creators and reinforcing the lineup of works handled with the planning and development of original works including music, anime productions, video content and the licensing of other companies' works. The Group has also actively facilitated the joint development of new content and the overseas expansion of content owned by the Company in collaboration with promising partners both in Japan and overseas who operate globally.

In the interim period of the fiscal year under review, consolidated net sales increased to 46,304 million yen (up 35.1% year on year), mainly due to a rise in the number of music packaged products sold and the number of live performances and events. Consolidated operating profit came to 2,634 million yen (compared to a consolidated operating loss of 2,229 million yen in the same period of the previous fiscal year). Consolidated profit attributable to owners of parent was 1,612 million yen (compared to a loss attributable to owners of parent of 3,289 million yen in the same period of the previous fiscal year).

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Avex Inc. (7860) Consolidated Financial Summary for Interim Period of Fiscal Year Ending March 31, 2022

(2) Summary of Financial Position

Assets at the end of the interim period under review decreased 10,667 million yen, to 94,438 million yen from the end of the previous consolidated fiscal year. This was chiefly attributable to a decline of 9,687 million yen in cash and deposits.

Liabilities were reduced by 13,247 million yen from the end of the previous consolidated fiscal year, to 33,518 million yen. This was primarily due to decreases of 5,918 million yen and 5,634 million yen in accounts payable - other and income taxes payable, respectively.

Net assets increased 2,580 million yen from the end of the previous consolidated fiscal year, to 60,920 million yen. This was mainly due to a decrease of 5,048 million yen in treasury shares (increase in net assets), despite a decrease of 2,382 million yen in retained earnings.

(3) Summary of Consolidated Financial Forecasts and Other Future Forecast Information

In regards to the summary of consolidated financial forecasts for the fiscal year ending March 31, 2022, the financial forecasts presented in the "Consolidated Financial Summary for the Year Ended March 31, 2021" announced on May 13, 2021 have been changed.

For further details, please refer to "Notice on Revision of Financial Results Forecasts" announced on November 4, 2021.

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Avex Inc. (7860) Consolidated Financial Summary for Interim Period of Fiscal Year Ending March 31, 2022

2. Quarterly Consolidated Financial Statements and Major Notes

(1) Quarterly Consolidated Balance Sheets

			(Unit: million yen)
		As of March 31, 2021	As of September 30, 2021
(Assets)
Current assets
Cash and deposits	52,654	42,967
Notes and accounts receivable-trade	14,120	14,868
Merchandise and finished goods	1,366	1,198
Programs and works in progress	4,652	4,151
Raw materials and supplies	300	279
Other current assets	11,904	11,309
Allowance for doubtful accounts	(281)	(291)
Total current assets	84,716	74,484
Noncurrent assets
Property, plant and equipment
Buildings and structures, net	1,082	1,174
Land	1,548	1,548
Other property, plant and equipment, net	479	432
Total property, plant and equipment	3,110	3,156
Intangible assets	3,864	3,804
Investments and other assets
Investment securities	7,143	6,823
Other investments and other assets	6,320	6,405
Allowance for doubtful accounts	(49)	(235)
Total investments and other assets	13,414	12,994
Total noncurrent assets	20,389	19,954
Total assets	105,105	94,438
(Liabilities)
Current liabilities
Notes and accounts payable-trade	1,457	2,071
Current portion of long-term loans payable	54	4
Accounts payable - other	18,341	12,423
Income taxes payable	6,040	406
Provision for bonuses	500	452
Allowance for returned goods	2,892	2,787
Provision for point card certificates	37	49
Provision for contingent loss	225	125
Other current liabilities	15,588	13,637
Total current liabilities	45,138	31,956
Noncurrent liabilities
Long-term loans payable	4	2
Liabilities for retirement benefits	390	415
Other noncurrent liabilities	1,231	1,144
Total noncurrent liabilities	1,626	1,561
Total liabilities	46,765	33,518

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